Wednesday, February 6, 2008

LONDON -(Dow Jones)- The U.K government has provided a GBP1.7 billion grant to the U.K.'s Transport for London, or TfL, to pay lenders to the bankrupt Metronet business, which TFL is acquiring out of administration.

In a statement Wednesday, TfL said that as a result of Metronet Rail BCV Ltd. and Metronet Rail SSL Ltd. being placed in administration in July, lenders were able to exercise a put option.

This requires London Underground Ltd. to pay GBP1.74 billion within seven days. However the Secretary of State for Transport Wednesday said a grant of GBP1.7 billion will be paid to TfL from the Department for Transport, to be used toward payment to senior lenders.

The lenders' debt claims were guaranteed by the government to be repaid to 95%.

The settlement is a step forward in the transfer of the Metronet businesses to TfL.

"Our priority remains the removal of Metronet from PPP Administration as quickly as possible," said London Underground Managing Director Tim O'Toole in a statement."A great deal of progress has already been made and we remain on track to transfer the two Metronet companies to two dedicated Transport for London companies in the early part of 2008."